Asian stock markets dropped Wednesday, following a steep sell-off on Wall Street, as investors reacted with skepticism to the U.S. government's latest plan to rescue the ailing financial industry with as much as $2 trillion in funding, AP reported.
Hong Kong's benchmark tumbled nearly 3 percent, while stock measures in South Korea and India fell about 1 percent or more. Further weighing on the region were figures showing China's exports plunged 17.5 percent in January - the sharpest drop in more than a decade - amid the global slowdown.
As in the U.S., investors across Asia questioned whether America's revamped bailout program, unveiled Tuesday by Treasury Secretary Timothy Geithner, would be enough to absorb the bad assets saddling bank balance sheets and free up the credit markets that govern lending to consumers and businesses.
Geithner said the plan to get trillions of dollars in financing flowing through the world's largest economy was urgently needed as part of the government's effort to stave off "catastrophic failure" of institutions. A centerpiece involves the government teaming with the private sector to buy up to $1 trillion in souring assets from financial firms. A separate lending program would be expanded to as much as $1 trillion from $200 billion for consumers and businesses.
Investors, however, complained about what they viewed as a lack of detail.
Garry Evans, a chief Asian equity strategist with HSBC in Hong Kong , called the plan "muddled." He said the government was skirting around what many investors have already concluded: that the U.S. may have to nationalize the banks for a period.
"People are not convinced that this plan is what it is needed," Evans said.
"They (U.S. officials) have still philosophically backed away from the ultimate conclusion, which is the government will have to take over financial institutions," he said. "Philosophically that's quite hard for the U.S. government to admit, but the history of banking crises shows that is what governments usually do."
Not even the colossal amounts of money announced in the U.S. are likely to make up the funding shortfall created by risky loans and other distressed assets the banks are holding, said Paul Schulte, a chief Asia equity strategist at Nomura International in Hong Kong.
The financial hole could be as big as $4 trillion, but U.S. officials have yet to fully explain the scope of the problem, he said.
"The problem is much larger than people thought and the solutions to this much larger problem are still not coherent," Schulte said. "The plan is absolutely a step in the right direction, but we have like 45 more steps to go."
In Hong Kong, the Hang Seng tumbled 388.60 points, or 2.8 percent, to 13491.48, while South Korea's Kospi lost 8.69, or 0.7 percent, to 1,190.18. Japanese markets were closed for a public holiday.